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Heartland Payment Upped to Buy

Heartland Payment has been witnessing rising earnings estimates on the back of strong third-quarter 2013 results and strategic initiatives to ramp up its growth profile. Moreover, this financial transaction service provider delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 12.4%. The long-term expected earnings growth rate for this stock is 14.7%.

Earnings were primarily aided by a solid top line, improving 9.5% year-over-year. The improvement was largely fuelled by solid growth in card processing, surge in Payroll, solid contribution from Campus Solutions and a substantial improvement in Micropayments.

Small and mid-sized enterprise (SME) quarterly transaction processing volume was $19.6 billion, up 3.9% year over year in the reported quarter.

Heartland Payment spent $6 million to buy back 0.2 million shares in the third quarter.

Moreover, Heartland Payment expects 2013 net earnings of $2.30 and $2.33 per share on revenues of $600 million and $605 million, respectively.

Heartland Payment also inked a deal with the merchant financing operations of American Express Company (AXP - Free Report) – American Express Merchant Financing. This deal will make Heartland the first processor to distribute American Express Merchant Financing.

The Zacks Consensus Estimate for 2013 moved north by 7.1% to $2.10 per share, as 3 of 6 estimates were revised higher over the last 60 days. The current estimate is below the guidance range provided by Heartland Payment. For 2014 also, 3 of the 6 estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 2.7% to $2.30 per share.

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